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Health insurance premiums through the exchanges are expected to rise by an average of 25% in 2017, with fewer health insurance plans available to choose from as health insurance companies continue to drop out of the exchanges.

About 75 percent of people enrolled in plans this year get subsidies to help pay their premiums, and those subsidies will go up along with premiums. However, those who make too much to qualify for subsidies because they earn more than 400 percent of the federal poverty level will pay the entire amount. For a family of four the threshold is $97,200 and for an individual it is $47,520.

Switching Health Plans with Dwindling Options

Those who see premium increases in 2017 and decide to switch to a less expensive plan with fewer benefits, will see a dwindling list of choices in many areas. An analysis by the consulting firm Avalere Health found that about one-third of U.S. counties, more than 1,000 counties in 26 states, will have only one health marketplace insurer next year. Another eight states will have only one participating insurer in a majority of counties. Healthcare.gov has taken steps to help consumers whose insurer is leaving by matching them to the closest comparable plan on the marketplace next year.

Why Are 2017 Premiums Increasing?

Due to financial losses from participating in the exchanges, insurers have either increased premiums or have decided to drop out. Facing a financial deficit of $430 million, Aetna has left the marketplace, and several others, including United Healthcare and Humana, have sharply scaled back their participation for next year.

Insurers have had to increase premiums because, they say, enrollment has brought in older sicker patients than was expected, and they can no longer deny coverage for pre-existing illnesses. Those younger and healthier who, it was hoped, would offset expenses incurred by sicker patients, are either covered under their parents’ plans or have decided to pay the non-enrollment penalty fee rather than participate in the exchanges.

The reinsurance plan within the Affordable Care Act that paid insurers who took on high cost patients they can no longer exclude, has not reduced insurance premiums by 10% as expected and expires this year, so insurers have raised premiums to cover its absence in 2017.

ACA Still a Bargain Compared to Before Plan Implemented

Although rate hikes for 2017 may seem excessive, Brookings Institute analysis concluded that, even after three years of rate hikes, individual coverage is cheaper today than it would be if the pre-Obamacare market were still in effect. The new policies are also more generous, covering about 17 percent more of a typical enrollee’s health costs than policies issued prior to the law. Added to that are the benefits of no longer denying coverage for pre-existing illnesses and allowing children to stay longer on their parent’s insurance plans.

States opting into federally subsidized Medicaid Expansion through the ACA saw millions of individuals with incomes up to 138 percent of the poverty level who were previously excluded now receiving benefits. Those states opting in to receive federal funds to set up and maintain a Basic Health Program, also through the ACA, are seeing coverage for their citizens with incomes from 138 to 200 percent of the federal poverty level. The Basic Health Program also provides an opportunity expand coverage to those above 200 percent of the federal poverty level.

What Will Healthcare Reform Look Like in 2018?

With fewer young and healthy to offset the cost of older and sicker patients, profit conscious insurers that remain in the exchanges will continue to raise premiums while lowering payments to doctors, hospitals, and other healthcare providers. Increased efficiency within the healthcare industry will continue to be the goal, with more emphasis on healthcare outcomes rather than on services provided.

We should see more states signing up for Medicaid Expansion and also growing state support for the Basic Health Program to cover more individuals.